Important Update: Eye on Energy is Evolving
We have been publishing the weekly Eye on Energy as an extension of the Schachter Energy Report to provide timely and expanded insights on the Energy and World Market. Over time, the volume of information and the effort required to produce this report have grown significantly. As a result, we are transitioning Eye on Energy to a paid subscription model on Substack to ensure its continued quality and sustainability.
Free Access Until September 10, 2025:
Eye on Energy will continue to be available at no cost until September 10, 2025. After this date, readers will have the option to subscribe on Substack at a rate of $30/month or $250/year. To subscribe on Substack go to https://josefschachter.substack.com/
Special Note for Schachter Energy Report Subscribers:
If you are a current subscriber to the Schachter Energy Report, you will continue to receive Eye on Energy as part of your Black Gold subscription at no additional cost.
Limited-Time Offer:
From now until September 30, we are offering a special promotion for those interested in becoming Black Gold subscribers. New annual subscribers will receive $100 off their first year. To redeem this offer, enter coupon code SER100 at checkout using the link below:
https://schachterenergyreport.ca/subscriptions/
We sincerely thank all of our readers for your continued interest and support.
Warm regards,
The Schachter Energy Report Team
Global Economic, Political & Military Update
Crude oil prices have declined >US$5/b from a week ago (today’s low US$64.66/b versus US$70.13/b last week) as weak demand and rising inventories (see EIA section) offset President Trump’s aggressive moves on secondary sanctions and increasing tariffs on Russian oil buyers. Today the US increased tariffs on India from 25% to 50% as a result of their purchases of Russian crude. India is unlikely to capitulate on this pressure and China for sure will not react. It will be interesting to see if Apple gets relief from these higher tariffs as it produces a significant number of iPhones in India as it moved production from Chinese factories. Maybe today’s announcement of spending an additional US$100B in the US will help to get an exemption. Apple’s CEO Tim Cook is expected at the White House later today.
The Friday US deadline for Russia to accept a ceasefire in Ukraine sees Russia not caring about letting this deadline expire. They have increased attacks against Ukrainian energy infrastructure as well as nightly attacks on civilians. On the battlefield they continue to make slow progress in consolidating their land grab in the Donesk region. An announcement that they sent nuclear submarines to the US east coast has been met by President Trump announcing that he sent two nuclear subs to the Russian coasts. The neo-cons in the Trump administration are taking control of foreign policy. Trump has swung 180 degrees from being anti-war to threatening Russia. NATO is gearing up its military spending to be ready to directly confront Russia. Drafts have been instituted and there is talk of NATO moving troops directly into Ukraine versus on nearby countries.
Crude oil demand in the US and China is softening so we continue to expect a decline below US$60/b in the coming weeks. The window for weaker prices is until winter arrives when we expect prices to rise over US$70/b and maybe see days over US$80/b in very cold periods during winter 2025 – 2026.
The ongoing US stock market rally (new highs for S&P 500 and NASDAQ but not the Dow Jones) has been focused on the AI and tech sectors and is very narrow in leadership. NVIDIA and META have crossed market caps of >US$4T. We saw this same gapping up of MAG7 and AI stocks in early February 2025 just before the Dow fell from 45,100 to 36,600 or a decline in 2.5 months of 19%. With sluggish economic data especially in the consumer areas, we suspect we could see a 20%+ general stock market correction (led by tech) over the coming months. Caveat Emptor! More on this below.
Investors should consider building up some cash reserves and be ready for a material market correction. It could get very nasty in September!
This week’s ‘Eye On Energy’ Details:
US inflation is picking up with the PCE (Personal Consumption Expenditure Index) rising to an annual rate of 2.6% and above the Fed’s target of 2.0%. This data point would keep the Fed from lowering rates in September.
Last week Friday’s July job report was seen as weak with only a rise of 73,000 jobs versus the expected gain of 100,000 jobs. The shock to the market was the revisions to May and June of 258,000 jobs which left the revised job increase for May at 19,000 jobs and 14,000 for June. The number of unemployed people for 27 weeks or more increased to 1.83M from 1.65M in June. President Trump fired the Commissioner of the Bureau of Labor and Statistics (BLS) Erika McEntarfer for in his words – juicing the data before the November 2025 Presidential election in favour of President Biden and now faking bad data for Trump. There is no evidence that either data was faked. Revisions are normal as more information is received. The data does show that the Federal Government shed 12,000 jobs in July and that manufacturing dropped 12,000 jobs and was the third straight month of such job losses. This data point would support the Fed to lower rates in September.
Part of the reason for weaker crude oil prices is that OPEC announced an increase in quotas of 547,000 b/d in September after an increase of 548,000 in August. It is unlikely that such volumes will be added. In June they were planning new quotas and production increases of 411,000 b/d but only achieved a rise of 220,000 b/d as many of the members were producing over quota or did not have capacity to bring on due to lack of capital investment.
China is now signalling to the US that no trade talks are possible without US concessions on Taiwan. With China agreeing to sell more rare earth critical minerals needed for high tech equipment built in the US, Trump has reversed his decision to hold back sale of NVIDIA and AMD high end semis to China. Those stocks have added to their runs due to this reversal. A bit of progress but not enough. The energy issues of China buying crude from Russia and Venezuela remain large differences to be resolved.
President Trump is putting substantial tariffs on countries without explaining the economic reasons only that they are political or the country just got on his bad side. Brazil got a 50% tariff just because they are going after their former President Jair Bolsonaro who is a friend of Trump’s. Switzerland was hit with a 39% tariff with no explanation. Big Pharma tariffs will start slow (according to President Trump yesterday) but if they don’t lower prices in the US then the tariffs could rise to 250%.
I remain concerned that other Geopolitical Challenges could take place and be the ‘Black Swan’ to take the general stock markets to our downside targets.
Our expected downside targets are:
Dow Jones Industrials Index 35,000 (now 44,191)
S&P 500 4,800 now (now 6,338)
NASDAQ 15,000 (now 21,104)
S&P/TSX Energy Index 230 (now 272)
WTI US$57-59/b (now US$64.91/b)
We see WTI rising after the next dip and the potential issues that could drive prices quite high in coming years are:
Global growth in late 2025 and from 2026 thereon should exceed global supplies.
Lack of production growth from most of the non-OPEC world.
US crude production levels are declining as seen in this week’s EIA report.
If you want to see our Action Alert BUYS and our ongoing research on 37 companies in the energy sector then please sign up now for access to the Schachter Energy Research reports.
EIA Weekly Oil Data
The EIA data for last week was negative for the most part. Total Stocks rose 2.3 Mb to 1662.8 Mb, Commercial Stocks fell 3.0 Mb to 423.7 Mb while the SPR gained 0.2 Mb to 403.0 Mb. Motor Gasoline Stocks fell 1.3 Mb while Distillate Fuel inventories fell 0.6 Mb. Exports rose 620 K b/d to 3.32 Mb/d as international buyers showed up to meet their tariff agreements to buy more US energy. Refinery Utilization rose 1.5% to 96.9% and is substantially above the level of 90.5% in 2024.
US Production fell 30 Kb/d to 13.28 Mb/d and is now down 116 Kb/d from last year’s level of 13.4 Mb/d. Low oil prices have now made even Tier 1 inventory uneconomic to drill and complete. It is clear now that the industry is cutting back spending due to insufficient returns from current low prices. Overall product demand fell 1.29 Mb/d to 20.1 Mb/d, as Other Oils demand fell 746 Kb/d to 4.56 Mb/d and Propane demand fell 284 Kb/d to 805 Kb/d. Motor gasoline consumption fell 112 Kb/d to 9.04 Mb/d. Jet fuel consumption fell 388 Kb/d to 1.71 Mb/d. Cushing Inventories rose 0.4 Mb to 23.0 Mb. This is below the 2024 level of 30.4 Mb.
Overall US demand is up modestly from 2025 at 0.7% to 20.19 Mb/d up from last year’s 20.05 Mb/d while Gasoline demand is down for the year by 0.5% to 8.77 Mb/d from last year’s 8.82 Mb/d.
In the coming weeks crude prices should continue declining towards the low US$60’s. If demand is weak during the latter stages of summer we could see a decline below US$60/b towards the US$57 – US$59/b area. We expect to get our next BUY signal at that time. In Q4/25 crude prices should lift to the US$72 – US$76/b level. Energy related stocks should be great performers as global demand picks up when winter starts.
EIA Weekly Natural Gas Data
Last week there was an injection of 48 Bcf (data July 25th). This raised storage to 3.12 Tcf with the biggest increase coming in the Midwest area at up 19 Bcf. NYMEX is now at US$3.05/mcf. In 2024 there was a 22 Bcf injection and for the five-year average, injection was 18 Bcf. US Storage is now 3.8% below last year’s level of 3.25 Tcf and 6.7% above the five year average of 2.93Tcf.
We recommend buying the very depressed natural gas stocks during periods of market weakness. Many natural gas stocks are very cheap now. We see much, much higher gas prices in Q4/25 as quite a number of new LNG plants come onstream over the next 12 months; one in Canada has now ramped up (now four shipments sent to China, Japan and South Korea). The latest Canadian shipment went to China, via a Petro-China tanker called Wudang. Three more tankers are heading to Kitimat to load up in the coming weeks as the start-up problems are resolved.
In the US Venture Global has commenced production from its Phase 2 of its Plaquemines LNG export terminal in Louisiana. The plant pulled in 2.9 Bcf of feedgas as it filled cargos.
AECO is trading <C$1.00/mcf, due to a wet summer in western Canada, particularly Alberta and the slower than expected ramp up of LNG Canada Train 1. Once regular operations are reached then one export cargo can be loaded every two days. We look for AECO to rise to over C$3.00/mcf in Q4/25 and over C$3.50/mcf during winter 2025-2026. Operators can hedge all of their 2026 production now at >C$3.00/mcf. Higher prices should come as more LNG plants are planned for the BC coast. European natural gas prices are around US$16/mcf (versus US$12/mcf in Asia) as storage is depleting quite quickly. European inventories are low for this time of year’s stock rebuild. Rebuilding storage to the required 90% level by November 1st for winter 2025-2026 will be a big challenge across Europe and should keep import prices high.
Catch the Energy Conference
Registration is Open – Join Industry Leaders at the Catch the Energy Conference!
Tickets are now on sale for the public. Become a subscriber and get two free tickets to the conference (tickets to the public are on sale at $119 per ticket each during the early bird window until September 20th (they then move to $179 each). To find out more go to www.catchtheenergyconference.com . We did sell out last year so if you would like to attend please get your tickets as soon as possible.
As usual SER subscribers will receive two complimentary tickets to the event. We look forward to seeing you there!
We are working away on getting our Presenters for this year’s conference. Below are those already signed up with confirmation forms in. We have met with other companies and will update this list as their confirmations come in. We have room for 45 companies and there are some slots still available. SER subscribers always get two complimentary tickets so please put the event in your calendar for October 18, 2025 if you can come to Calgary.
If you know of any companies with great stories and are public companies then have them reach out to me and we can meet them and see if the company would resonate with our attendees. We expect to have over 800 attendees this year versus just over 700 last year. My contact information is josef@sersinc.ca.
Thank you to our Sponsors, Exhibitors and Presenters. It is going to be a great lineup and largest attendance this year!
Baker Hughes Rig Data
In the data for the week ending August 1st, the US rig count saw a decrease of 2 rigs to 540 rigs. US Rig activity is now 7.8% below the level of 586 rigs working last year. Of the total US rigs working last week, 410 were drilling for oil and this is 14.9% below last year’s level of 482 rigs working. The natural gas rig count is up 26.5% from last year’s 98 rigs, now at 124 rigs. Companies remain financially disciplined despite the Trump administration edict to ‘drill baby drill’. WTI will need to exceed US$80/b for some time before drilling activity picks up materially for crude production to reach new all time highs. Natural gas needs to be over US$4.00 for NYMEX to incentivize natural gas drilling activity on a consistent basis. President Trump is in glee over the lower price of crude and lower gasoline prices (one of his election promises) however, productive capacity is shrinking.
In Canada, there was a 5 rig decrease to 177 rigs. This rig activity rate is now down 19.2% compared to last year’s 219 rigs. There were 124 rigs drilling for oil last week down 17.3% from 150 last year. Drilling for natural gas was down 23.2% from 69 rigs to 53 rigs due to weak natural gas prices.
Energy Stock Market
The S&P/TSX Energy Index today is at 272 (down six points from last week) as crude prices weakened. I still expect a further 10-15% correction in the Index.
We like to BUY when stocks are cheap and being ignored. Bargains are clearly being seen now. Late July should provide the next great window to add to favourite positions at prices 10% lower than today. Investors should decide what you want your energy weighting to be for this long energy super cycle. Our BUY List includes ideas from the Pipeline/Infrastructure/Royalty area, Canadian oil and natural gas ideas, energy service ideas and companies working internationally. Our list includes large Conservative ideas and small to large caps in our Growth and Entrepreneurial categories. Add to your current ideas or add new ideas. We expect global demand should exceed supplies at that time. We see WTI prices above US$75/b consistently during 2026.
We are working on our next SER Monthly that should be out to paid SER subscribers August 14th. It will include the start of coverage of Q2/25 results of eight companies. If you are interested in independent analysis of the energy sector and to see our Balance of Evidence sections on the individual companies then become a subscriber. https://schachterenergyreport.ca/subscriptions/
